Trading update
THE WEIR GROUP PLC
Trading Statement
The Weir Group PLC today issues the following trading statement
in respect of the 531 weeks ended 1 January 2010.
During the final quarter, the Group continued to perform well,
with strong profitability and more robust input trends.
Profits have benefited from the proactive management of our cost
base and favourable volumes at Weir SPM, partly offset by an
increased interest charge. In addition we have also seen a
continued positive foreign currency translation effect on revenues
and profits.
Order input2 in the final quarter was broadly in line
with the third quarter and for the 531 week period was
18% lower than the prior year, compared to 22% lower for the 39
week period. Aftermarket input has continued to demonstrate
resilience during the quarter.
Divisional Overview
Minerals input2 was 20% lower for the 531
week period, compared to 22% lower at the end of the third quarter.
The final quarter benefitted from some significant original
equipment awards in South America. Input levels do indicate a
bottoming of the market but the timing of sustained recovery is
still open.
Oil & Gas input2 was 8% lower compared to 17%
lower at the end of the third quarter. This improving trend was
principally due to a good final quarter for Weir SPM with growth in
after market sales reflecting a modest rise in rig count and
increased product use in more aggressive shale environments across
North America. Forward visibility however, remains limited.
Power & Industrial input2 was 8% lower compared
to 10% lower at the end of the third quarter, reflecting continued
strength in power orders most notably from China.
Material Events
On 11 January 2010 the Group announced the appointment of Jon
Stanton as Group Finance Director. He will join in the
Spring following completion of existing client commitments.
Financial Position
Cash generation in the final quarter remained strong.
To further improve the Group's financial flexibility, on 11
January 2010, the Group issued, through a Private Placement, the
equivalent of US$250m of five year (US$110m) and eight year
(US$140m) fixed rate notes in a combination of US$ and Sterling at
an average US$ equivalent interest rate of 4.8%. The proceeds
will be used to repay existing borrowing facilities. Associated
floating-to-fixed interest rate swaps have been cancelled resulting
in an increase in the expected 2009 interest charge. While
the Group continues to hold committed revolving credit facilities
totalling £625m this issuance broadens the Group's funding sources
and maturity profile.
Outlook
As a result of the Group's good performance in the final
quarter, the Board now expects profit from continuing operations
before tax, intangibles amortisation and exceptional items for the
531 weeks ending 1 January 2010 to increase to around
£185m3.
While the Group enters 2010 in a strong position, with some
positive emerging trends across our principal end markets, the
lower opening order book and uncertainty over speed of recovery
means that it remains too early to call any significant upside to
the 2010 outlook.
The Group's preliminary results for the 53 weeks ended 1
January 2010 are scheduled to be announced
on 9 March 2010.
Notes:
1
The comparison of 53 weeks ended 1 January 2010 with 52 weeks in
the prior year period has no material impact on the year-on-year
trends.
2 Input is
reported on a constant currency basis, including the impact of
prior year acquisitions and disposals.
3
Group guidance for
continuing operations profit before tax, intangibles amortisation
and exceptional items at 2 November 2009 was the upper end of
analyst forecasts as at 30 October 2009 which ranged from £151.6m
to £177.1m. Reuters Knowledge Consensus at 8 January
2010 for profit before tax, intangibles amortisation and
exceptional items was £176.6m with a range between £175.0m and
£188.2m.
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Contact details: The Weir Group
PLC
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Keith Cochrane, Chief Executive
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Tel. 0141 637 7111 (switchboard);
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Helen Walker, Public Relations Manager
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Tel. 0141 308 3739 (Mobile: 07789 032296)
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Maitland
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Tel. 020 7379 5151
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Suzanne Bartch
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(Mobile: 07769 710 335)
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Rowan Brown
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(Mobile: 07834 434 662)
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